Saturday, October 4, 2008

Family – Economic Clash of Ideas

My approach to finances and financing is philosophically and diametrically different from those of my two children and their spouses. Even this part of my life makes me feel old. This entry is not speaking to which view is right and which is wrong. It relates to my inability to understand the next generation’s economics. Does it matter? Yes, because I worry for them. No, because it is their responsibility. Christine and I worked our buns off to be debt free and we are. To know my children are engulfed in a debt quagmire bothers me. Why should this make me feel old? Because I share my Dad’s approach to money, frugality and saving. My father died this past year at 93 years of age. He worked as a factory laborer until he retired at age 65. I wonder whether he ever earned more than $15,000 per year. His home cost him $10,000 in 1955 and he sold it for $60,000 in 1985. His company pension was pocket change yet his estate yielded $40,000. That’s amazing. He was a cash man. No plastic. So, like most of their peers, one of my young couples is mortgaged up to the yin yang but when requiring more cash are encouraged by the bank to increase the mortgage ceiling. It's common practice. Their peers do it. The other couple, having sold a house have needed to live off of some of that sale money before purchasing another home in our area where house prices are atmospheric. They too are unruffled about it. I grant you, it may be the resilience of their ages and the reasonable expectation of many years ahead to deal with debt. I am on the downside of the time line and I fret for them. All four of them are highly intelligent, confident, informed and conversant. I am sure they know what they are doing but then the American economy tanked last month and thousands of people have lost their homes, and I wonder whether this credit shattering scenario will visit us in Canada. If it does, then both my couples will be hosed. And then what? I suppose they all come to live on our property. Six adults and five children. I can always convert the garage into living space for Christine and me. I can build in a padded room. I can run away from home.

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